Inheriting an ISA Allowance (Additional Permitted Subscriptions)

Husbands, wives and civil partners can inherit their loved one’s ISA allowance thanks to the launch of Additional Permitted Subscription (APS).

If your spouse/civil partner had an ISA and passed away on or after 3 December 2014, APS can increase your ISA allowance. Even if your spouse/civil partner left the funds in their ISA to someone else, you’ll still inherit the ISA allowance they’ve built up over the years.

It’ll transfer to you as an Additional Permitted Subscription allowance, and will help your money go further by increasing the amount of interest you can earn tax-free.

How do Additional Permitted Subscriptions work?

Your APS allowance is equivalent to the value of your spouse/civil partner’s ISAs when they passed away. This not only includes the total amount they’d put into ISAs, but the amount of interest they’d earned on them up to the date of their death.

Say, for example, your spouse/civil partner had £50,000 in a Cash ISA and they’d earned £500 of interest. Your APS allowance would be £50,500. Which means you could put £50,500 (plus your annual ISA allowance of £20,000 if your provider allows) into ISAs and begin earning interest on it tax-free.

How do I use my APS allowance with Skipton?

To use your Additional Permitted Subscriptions (APS allowance) with a Skipton Legacy Cash ISA, you just need to fill in a form. If you’re at all unsure, please call us on 0345 850 1700.

The Legacy Cash ISA only allows APS, not your annual allowance, but as APS does not count as current year’s subscriptions you can open another Cash ISA (as long as you don't have one already in the current tax year).

If you already know how you’d like to use your APS allowance, please see the options below:

If you’d like to use your APS allowance with a Stocks & Shares ISA, your local Skipton Financial Adviser can take you through the options we offer through a range of providers.

Stock market-based investments are not like building society savings accounts as your capital is at risk and you may get back less than you invested. The value of your investments and any income from them may fall as well as rise.

Some common questions

As savings specialists, we’re fully up to speed with the APS allowance and Cash ISAs. Below are the answers to a few common questions, but if you’d like to talk things through with us, you’re very welcome to ask at a branch or call us – we’d be glad to help.

Get more details about the APS allowance from the BBA APS leaflet.

You’ll be eligible for an APS allowance if:

  • Your spouse/civil partner had an ISA in the UK and passed away on or after 3 December 2014;
  • You were married or in a civil partnership;
  • You were not legally separated or likely to become legally separated (if either spouse were in a care home this would not generally be considered as legally separated); and
  • You’re 16 years or older.

If you’re not a UK resident, you’re still entitled to an APS allowance if you meet the above criteria. We only offer ISAs to UK residents though. So, regrettably, you’ll need to transfer your APS allowance to a bank or building society that provides ISAs for non-UK customers.

Under current rules, you can’t transfer your spouse/civil partner’s ISA directly to you. If the ISA funds are left to you, however, you can reinvest them in an ISA using your APS allowance.

Even if your spouse/civil partner left the funds built up in their ISAs to someone else, you’ll still be entitled to the APS allowance. If, for example, the value of their ISAs was £55,000 and they split that between your children, you could still use your APS allowance to put up to £55,000 into an ISA.

You’d then begin earning interest on it tax-free straightaway. Whereas, if you left that money in a standard savings account, you may have to pay tax on some of the interest.

You can use your APS allowance with your spouse/civil partner’s ISA provider, or you can transfer it to another one. You can only transfer your APS allowance to another bank or building society once, though. So you need to make sure you choose the right one for you.

You must use your APS allowance within three years of your loved one’s death. Or 180 days after the completion of administration of their estate if this is later.

At Skipton, you can make as many payments as you like into your ISA against your APS allowance, until you’ve used it all, subject to the above time limits. Your APS allowance is classed as previous years’ funds, so it doesn’t count towards your annual ISA allowance.

To make payments against your APS allowance, you can use either inherited money or other funds.

After an APS payment has been made, the funds relating to the subscription can be transferred to another ISA. If the APS allowance has not been fully used, any further APS allowance payments must be made to the original ISA provider as per the terms of the account. But this may not be possible if that account has been closed, and the remaining APS allowance would be lost. If you leave £1 in the Legacy Cash ISA, it would remain open and you could still pay in any remaining allowance.

If your husband, wife or civil partner had any kind of Cash ISA, Stocks & Shares ISA, Innovative Finance ISA or Lifetime ISA, you’ll be entitled to an APS allowance. Unfortunately, it doesn’t apply to Junior ISAs.

Need help?

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